The Potential for a Win-Win

As I travel to major cities to speak at Workforce Live events, I am struck by how closely the issues HR and learning leaders face aligns with our experience in major strategic corporate partnerships.

For instance, it’s a well-known fact that effective leadership development is a necessity if organizations are to survive and thrive in today’s global marketplace. Yet, learning is still struggling to get the investment resources needed to develop future leaders.

That doesn’t make sense, and senior leaders know it. They are increasingly concerned about their talent pool, and they should be. The 2014 PricewaterhouseCoopers CEO survey showed 63 percent of respondents had concerns about the availability of key skills, up from 58 percent the year before. Why? For one thing, the talent crunch brought on by retiring baby boomers is quickly becoming a reality. Some 10,000 highly experienced employees leave the workforce every day.

It seems logical that organizations would throw sufficient money at this particular problem. But here’s where the disconnect gets tricky — to fix what’s broken will require a shift in thinking about resources allocation.

Corporations traditionally send promising high-potentials or more seasoned senior leaders to expensive executive development programs offered by prestigious universities. The last steps of succession are particularly well funded. But the real challenge is at the first step of the pipeline: the key step from individual contributor to front-line supervisor.

That step is a gigantic transition for emerging leaders and often involves completely unfamiliar responsibilities. It requires education, training and senior management support to happen successfully, and that can be costly.

IBM has funded development with what amounts to a 10 percent employee tax paid as a reduction in compensation. Essentially, employees fund their development with their own wage offset. Other organizations like Verizon partner with educational institutions like mine, Bellevue University. This approach leverages resources not typically available in strapped learning and development departments, such as the tuition assistance benefits available to individual employees.

In addition to sanctioned tuition reimbursement, some corporations have found value by combining their support for veterans with government-funded veteran educational benefits to meet corporate leadership development objectives. By tapping these funding sources, leaders side step the continuing debate about whether learning and development is an investment or an operating expense that reduces earnings per share.

There are additional leadership development benefits to be gained. However, one of the most important is less than self-evident. The more important employee development is to the success of the enterprise, the more likely it is to be mandated from top down for a targeted employee population. Even then, many of those targeted will opt out. Senior management is often more than a little incredulous when they find out as much as 25 percent of the targeted population managed to get a waiver for mandatory learning.

The alternative is to have a development strategy that promotes opt-ins. Alternate funding streams like tuition assistance, veterans’ benefits and employee personal capital are all forms of opt-in and extremely important. In the face of future turnover, mandated development has a high risk because the ROI on every dollar invested in development for those who eventually leave is zero.

To help avoid this loss, it’s important to fully understand the motivation and intention behind development activities before an investment is made. Learning requires an employee’s time and energy. Only those who intend to use the learning in a career within the company will opt in. So, learning leaders have to work with their HR peers to connect learning directly to retention, performance and succession efforts in addition to finding resources to fund leadership development efforts.

The bottom line is there are untapped funding sources for learning and development todevelop a leadership pipeline. The real beauty of the alternatives is they not only provide funding for learning, but also they inherently increase the ROI by targeting fund expenditure based on learners’ intention and motivation — those who voluntarily opt-in. That’s a win-win for both the company and the employer.